Centre curtails EPF contributions by 2%, move likely to benefit 650,000 firms

The Centre on Wednesday decreased statutory deductions on staff’ provident fund (EPF) contributions for each formal sector employers and staff from the standard 12% every to 10%, for the May-July interval. The transfer will profit round 650,000 corporations.

Existing social safety legal guidelines make it necessary for workers and employers to deposit 12% every, or 24% of the fundamental wage, plus housing allowance, as EPF deductions each month. The transfer can have twin advantages: a discount in worker prices for personal corporations, whereas staff’ take-home pay will enhance by 2%.

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“Businesses need support to ramp up production over the next quarter. It is (also) necessary to provide more take home salary to employees and also give relief to employers in payment of provident fund dues. Therefore, statutory PF contributions of both employers and employees will be reduced to 10% for all establishments covered by EPFO for the next three months,” finance minister Nirmala Sitharaman mentioned.

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This can be relevant to all staff, or practically 43 million staff throughout 650,000 institutions, who don’t profit from the PM Garib Kalyan bundle introduced in March. The transfer additionally offers a Rs 6,750-crore liquidity help to employers and staff through the Covid-19 pandemic, she added.

However, central public sector enterprises and state PSUs will proceed to pay 12% of the employer’s share, whereas staff contribute 10%. Besides, Sitharaman mentioned the federal government can pay the EPF contribution of each the employer and the worker (12% every) for 3 extra months for corporations with a headcount of lower than 100, and the place 90% staff earn lower than Rs 15,000 monthly.